Navigant forecasts US military spending on non-tactical alt drive vehicles to more than double to $926M by 2020 from 2013; 11.4% CAGR

5 July 2013

In a new report, Navigant Research forecasts that US military spending on alternative drive vehicles (ADVs—including hybrid electric vehicles (HEVs), plug-in electric vehicles (PEVs), and ethanol-powered vehicles—for the non-tactical fleet will increase from more than $435 million in 2013 to $926 million by 2020, a CAGR of 11.4%. A majority of the growth will be made through spending on HEVs and PEVs, Navigant projects.

Navigant forecasts that annual fuel consumption in the non-tactical fleet will decrease by a 2.5% compound annual growth rate (CAGR) almost from more than 81 million gasoline gallon equivalents (GGEs) in 2013 to just fewer than 70 million GGEs in 2020 due in part to increased use of alternative fuel vehicles.

In the near-term, the military is focusing on the adoption of microgrids, ADVs, and V2G (vehicle-to-grid) technologies within the military’s non-tactical vehicle fleet, Navigant said.

The US military is the largest consumer of energy and fossil fuels on the planet. According the CIA’s 2007 World Factbook, only 35 countries consume more oil than the US Department of Defense (DOD), and only three countries consume more oil per capita. This fact is concerning to the military due to the security, logistical, and economic challenges that are inherent in acquiring fossil fuels from regions typically unstable and hostile to US interests. In some instances the cost of moving fuels to forward military locations can be a multiple of the cost of the fuel itself. Renewable fuels that can be produced closer to the point of consumption can be less costly to produce and lower the cost in personnel to secure the fuel source. To capture the strategic, economic, and environmental benefits of alternative fuels, the military is investing heavily in alternative fuels development and alternative drive vehicles (ADVs).

Fossil fuel consumption varies by use in times of combat operations and peace. Non-tactical aerial, marine, and ground vehicles have predictable requirements, however during combat operations fossil fuel consumption from tactical vehicles and equipment spikes to support stationary forward operating base (FOB) operations. This spike is considerably costly as transporting and protecting petroleum-based fuels to FOBs significantly increases the cost per gallon. This increased cost is defined as the fully burdened cost of fuel (FBCF) which is the commodity price, plus the total lifecycle costs of all people and assets required to deliver fuel from point-of-sale to the end user. FBCFs vary dramatically in tactical theaters from $25 per gallon to as much as $600 per gallon depending on how far the fuel must travel to the end user. In extreme cases, the FBCF is estimated to be well over $1,000 per gallon.

—“Alternative Drive Vehicles for Military Applications”

The military is acquiring increasing numbers of E-85 and B-20 capable vehicles, as well as hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), and battery electric vehicles (BEVs) and fast tracking infrastructure development. However, the General Services Administration (GSA) reports that gasoline still accounts for almost 70% of the non-tactical fleet’s fuel consumption.

The military is pursuing the development of microgrids in tandem with vehicle-to-grid (V2G)-enabled plug-in electric vehicles. Microgrid development enables bases in both tactical and non-tactical operations to utilize energy generation sources more efficiently and operate independently of conditions on the grid.

V2G-enabled PEVs used solely in non-tactical applications are an additional layer of energy support and storage that can assist islanding microgrids and balance distributed energy generation resources by providing power from the vehicles’ battery packs to buildings.

V2G-enabled PEVs can also be used to reduce military facilities energy costs through demand charge reductions and generate revenue through ancillary service (AS) market participation.

By the end of 2013, the military plans to spend $20 million to test a fleet of 500 V2G enabled trucks and buses, Navigant noted.